The Midas touch of the median

THERE is a lot of talk that location is usually considered to be the ultimate success criterion of real estate purchase, according to Bellarine Property managing director Christian Bartley.

“Apart from traditionally successful locations the obvious things to watch out for in cities and big towns are areas about to be gentrified, or areas where amenities are undergoing upgrading, making them more sought after or more accessible as dormitory suburbs.”

He said that the bottom line as far as location was concerned in real estate was to be sure the area was growing.

“However, there is another not so often cited method of making sure you have the Midas touch.

“The surest way to see strong capital growth and to maximise resale, no matter what the current state of the economy, is to buy property priced at or within 15 per cent of the median (not average) price for the area of your choice.

“The total outlay should include any renovations or extensions.”

According to Mr Bartley, that doesn’t mean gains can’t be made by buying in a higher price bracket.

“We’re talking about playing it safe in order to maximise capital gain and minimise risk.

“Properties more than 15 per cent above the median for any given area are particularly affected when the market slows.

“After all, competition is essential for high prices and oversupply and under demand occur more quickly above the median price.

“Even in good times, the highest price categories attract the smallest percentage of the buyer pool.

“If you have more to spend than the median and you are afraid of over-capitalising, choose an area where the median is higher, or buy two properties – one for investment and one to live in.”

He said that even when the market started to gather momentum, it would gather first in the median price category.

“By very definition, the median price is where the turnover is.

“Consult your accountant or a reputable real estate agent if you don’t know how to work out the median for the area in which you wish to buy.”

For more information, phone Mr Bartley on 0410 695 325, email [email protected] or head to bellarineproperty.com.au.